London Welsh have won their appeal against the decision to block their promotion to the Aviva Premiership with Newcastle Falcons set to be relegated to the Championship as a result.

The Exiles claimed this season's RFU Championship title with victory over Cornish Pirates last month but were denied the opportunity to step up from the second tier having failed to meet the minimum standards criteria (MSC) laid down by the Professional Game Board (PGB).

However, London Welsh rejected the claim that they could not fulfill crucial primacy of tenure requirement at their proposed Premiership home, Oxford United FC's Kassam Stadium, citing the fact that three existing Premiership clubs - London Irish, London Wasps and Saracens - all have similar ground share agreements in place. While the appeal panel decided that London Welsh had not fulfilled the criteria, they also ruled the primacy of tenure requirements were "contrary to EU and competition law" and therefore "void".

The panel also went onto say that the "the three club exemption" - which refers to the maximum number of clubs allowed to ground share in the Premiership - was too narrow a stipulation and placed a "restrictive effect on aspirant Championship clubs".

"The club has always believed in the strength of its case for admittance into the Aviva Premiership, as winners of the RFU Championship, and today's outcome confirms that we were right to appeal against the decision that London Welsh should not be promoted," the club said in a statement.

"The fundamental strength of our case was based not only on overwhelming legal merits, including in particular anti-competition grounds, but also, equally importantly, on the fairness and justice of rewarding through promotion the team winning on the pitch.

"It is therefore not only a victory for London Welsh, its players, coaching staff and all its supporters but also for sport in general and the game of rugby union in particular, reinforcing the ethos and fundamental sporting ethic that the best team should receive the appropriate rewards.

"The club would like to thank again its players and coaching staff for their endeavours and commitment last season in bringing the Championship title to London Welsh, and especially for their patience and understanding over the past month as we went through the appeal process."

Newcastle, who unsuccessfully argued that London Welsh were "not entitled to succeed because of its delays in making arrangements to secure the Kassam Stadium" as its home stadium, now look set to play their rugby in the Championship next term but could possibly take their case to the High Court. However, it looks unlikely with a statement suggesting they are preparing for life in England's second tier.

"We are extremely disappointed with the decision and the representations witnessed at the appeal hearing and we will leave our options open as to where we go from here," it said.

"We do not underestimate the competitiveness and challenges we face in the Championship but under the tutelage of Dean Richards we will have one, and only one goal - to win. Dean has been in this situation with Harlequins and he understands what it takes to navigate through the Championship, whilst putting together a team that will be successful with immediate effect on our return to the Aviva Premiership.

"Winning rugby will be a habit at the Falcons and we expect to bring attacking and exciting play for our fans to enjoy. Add some semi-finals, finals and trophies to the mix and it will be a season to remember."

The RFU's CEO Ian Richie commented on the decision saying: "I would like to thank all involved for their professionalism throughout the considerable time dedicated to this matter, which ensured the case in question was approached with the importance it warranted.

"The decision taken by the RFU Board was based entirely upon the results of the independent auditor's report in accordance with the Minimum Standard Criteria (MSC), as set out by the Professional Game Board (PGB). We will now instigate a full review of the MSC, working within the PGB, with the aim of ensuring all stakeholders are agreed on the process going forward.

"The RFU considers this matter closed which will now enable all clubs to continue their planning for the 2012-13 season."